Bergen Brunswig Advances Operating Earnings 23% on Robust 20% Revenue Gain for Third Quarter; Drug Company Leads Growth With 43% Increase in Operating Earnings.ORANGE, Calif.--(BW HealthWire)--July 29, 1998--Bergen Brunswig Corporation (NYSE NYSE See: New York Stock Exchange :BBC BBC in full British Broadcasting Corp. Publicly financed broadcasting system in Britain. A private company at its founding in 1922, it was replaced by a public corporation under royal charter in 1927. ) announced today a strong third quarter ended June 30, 1998, producing a 23% increase in operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before on a 20% revenue gain. "Bergen Brunswig's third quarter results were simply outstanding," according to Donald R. Roden, president and chief executive officer of Bergen Brunswig Corporation. "The fundamentals of our company have never been stronger. Sales exceeded our expectations, growing in excess of 20%, while 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 percent of sales continued to move downward, resulting in operating earnings growth of 23%. "Leading our momentum, Bergen Brunswig Drug Company -- which accounts for about 90% of our total revenues -- increased its operating earnings 43% and its operating earnings margin 34 basis points on a revenue gain of 19%. Our customer valued 'performance-based' contracting approach, coupled with our continued commitment to service levels and on-time deliveries, which we believe are the best in our industry, have resulted in these stellar results. Our associates are once again to be commended for growing earnings faster than revenues. Overall operating earnings per associate advanced 20% during the quarter to $10.9 million." Financial Highlights Third Quarter Revenues were $3.5 billion compared to last year's third quarter revenues of $2.9 billion. Distribution, selling, general and administrative expenses as a percentage of sales continued to decline, decreasing nine basis points to 3.79%. Net earnings advanced 22% to $27.2 million in the quarter versus $22.2 million 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 reached $.53 compared to $.44 in the prior year third quarter, climbing 20%. Nine Months Ended June 30, 1998 Revenues grew 16% to $10.1 billion compared to last year's nine-month revenues of $8.6 billion. Distribution, selling, general and administrative expenses as a percentage of sales declined to 3.87%, an improvement of 19 basis points over last year's nine-month ratio of 4.06%. Net earnings growth of 20% outpaced revenue growth, reaching $77.1 million for the first nine months compared to $64.3 million in the prior year. Diluted earnings per share increased to $1.51, a 19% gain over last year's $1.27. Fiscal 1998 nine-month results reported above exclude a merger-related charge of $9.8 million, with no income tax benefit, or $.20 per diluted share, for expenses related to the pending merger with Cardinal Health, Inc. Fiscal 1997 nine-month results exclude a one-time charge of $3.4 million, net of income tax benefit of $2.4 million, or $.07 per diluted share, for expenses related to Bergen's proposed merger with IVAX Corporation, which was terminated in March 1997. "Our third quarter growth was very strong, the result of new customer agreements signed earlier in the year along with the growth of existing customers," said Neil F. Dimick, executive vice president, chief financial officer and president of Bergen's specialty companies. "Bergen's strategy is to align with customers who are among the leaders in their respective markets; for example, our largest customers, those purchasing over $50 million of product in the quarter, increased purchases from Bergen 31% for the third quarter this year versus last year." Mr. Roden added, "Increasing service measures continue to distinguish us in the marketplace, as we persist in delivering new and innovative value-added programs for our customers. Total company productivity continues to improve despite our pending merger. At the same time, our Drug Company set a new record in efficiency with operating expenses as a percentage of sales reaching an all time low of 2.07%. In fact, 65% of our drug distribution centers are so streamlined that operating expenses as a percentage of sales are below 2.00% and our plan for fiscal 1999 improves on these already impressive efficiency levels." Operating Highlights Bergen Brunswig Drug Company (BBDC BBDC Brantley Capital Corporation (Cleveland, OH) BBDC before bottom dead center (referring to a piston in a engine) BBDC Banting and Best Diabetes Centre BBDC Beijing Benz-DaimlerChrysler Automotive Co, Ltd ) has dramatically improved its operating earnings, stabilizing operating earnings as a percentage of sales over the 2.00% mark. Strong sales growth was experienced across all regions with particular strength in the food/drug customer class. Commenting on the results for the BBDC, president Brent Martini said, "As always, our associates really pulled together to achieve a number of 'behind the scenes' accomplishments in addition to being out there in the field bringing in new business. Conversion of new customers, especially large ones, is not a simple task, but our team orchestrated near flawless conversions in record time of three very large accounts announced earlier in the year. During the quarter, we also managed to finalize a very important strategic relationship with Kaiser Permanente whereby Bergen and Kaiser will join together to reduce costs while enhancing profitability through the establishment of a Supply Chain Development Fund that includes a performance-based, revenue-sharing formula. "In the retail sector, our program and service offerings continue to expand with our latest innovation -- the Patient Care Information Network (PCIN PCIN Perth County Information Network (Canada) ) -- being unveiled at our Second Annual Healthcare Congress and Manufacturers' Exposition which starts tomorrow in San Antonio. PCIN is an information-based network that brings together targeted consultative services by disease state, a patient-specific compliance program, and negotiated manufacturer rebate and incentive initiatives that will enable Bergen's retail pharmacy customers to assist their patients in managing treatment programs as well as enhance the growth of their overall pharmacy practices. "Another highlight at the Healthcare Congress, and for retail pharmacists across the country, is the roll-out of our new PharmaHealth Natural Care Center. PharmaHealth capitalizes on the thriving consumer interest in natural care health products with a full array of vitamins and supplements, herbal medications, homeopathic Homeopathic A holistic and natural approach to healthcare. Mentioned in: Ehlers-Danlos Syndrome homeopathic, adj remedies, natural teas and elixirs, and sports medicine sports medicine, branch of medicine concerned with physical fitness and with the treatment and prevention of injuries and other disorders related to sports. Knee, leg, back, and shoulder injuries; stiffness and pain in joints; tendinitis; "tennis elbow"; and and natural weight loss products. This program introduces a whole new category of high margin products for both retail pharmacists and Bergen and provides the tools and consultative platform to enable pharmacists to treat patients more effectively." Bergen Brunswig Specialty Company (BBSC), still Bergen's fastest growing subsidiary, delivered a 67% increase in operating earnings and produced quarterly revenue growth in excess of 100%. ASD ASD abbr. atrial septal defect ASD Atrial septal defect, see there Specialty Healthcare formed an agreement with OpTx Corporation recently in which the two will partner to provide specialty treatment groups and clinics with integrated clinical services and information technology tools. The proprietary suite of OpTx technology tools gives ASD a unique, patient-centered system that can be marketed to oncology practices to support their guidelines-driven care and enhance efficiency. Integrated Commercialization Solutions(ICS (1) (Internet Connection Sharing) A Windows feature that enables two or more computers to share one Internet connection. First introduced in Windows 98 Second Edition, sharing is accomplished with network address translation (NAT), which is the common method. ) advanced product launch planning this quarter for several customers awaiting 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. approval. Additionally, Celgene received FDA clearance to market and sell THALOMID for the treatment of ENL Noun 1. ENL - an inflammatory complication of leprosy that results in painful skin lesions on the arms and legs and face erythema nodosum leprosum Hansen's disease, leprosy - chronic granulomatous communicable disease occurring in tropical and subtropical -- a severe and debilitating de·bil·i·tat·ing adj. Causing a loss of strength or energy. Debilitating Weakening, or reducing the strength of. Mentioned in: Stress Reduction condition associated with leprosy leprosy or Hansen's disease (hăn`sənz), chronic, mildly infectious malady capable of producing, when untreated, various deformities and disfigurements. -- allowing ICS to soon initiate a managed distribution system. ICS also helped to relaunch a biotech radiodiagnostics product for colorectal cancer colorectal cancer Malignant tumour of the large intestine (colon) or rectum. Risk factors include age (after age 50), family history of colorectal cancer, chronic inflammatory bowel diseases, benign polyps, physical inactivity, and a diet high in fat. and launched a new outsourcing service to handle the nursing education support for a new drug to treat patients with unstable angina un·sta·ble angina n. Angina pectoris characterized by pain of coronary origin that occurs in response to less exercise or other stimuli than usually required to produce pain. . Bergen Brunswig Medical Corporation (BBMC) continues to advance its multi-market strategy by adding new customers in all market segments, with the largest sales increase coming from the acute care arena this past quarter at approximately 10%. Additionally, BBMC gained 120 new physician-practice customers during the quarter and signed renewed and enhanced agreements with group purchasing organizations -- AmeriNet and HSCA HSCA House Select Committee on Assassinations HSCA Harvard-Smithsonian Center for Astrophysics HSCA Hawaii State Chiropractic Association HSCA Hazardous Substances Control Act HSCA High School Culinary Arts -- setting the stage for stronger growth ahead. BBMC also strengthened its presence in the West region through the acquisition of Hawaii-based Pacific Criticare in May. Not only does this acquisition add additional customer penetration in the acute care and 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. markets, but it enables Bergen to provide one-stop-shop capability for customers in Hawaii and the rest of the Pacific. Similarly, BBMC is in the process of opening a new distribution center in Phoenix to take advantage of the growth potential existing in that particular market. On August 24, 1997, Bergen Brunswig and Cardinal Health, Inc. announced that they signed a definitive merger agreement which was subsequently approved by both companies' shareholders on February 20, 1998. On March 9, 1998, the U.S. Federal Trade Commission filed a complaint in the United States District Court for the District of Columbia The United States District Court for the District of Columbia is the United States District Court that hears cases originating in the District of Columbia over which federal courts have original jurisdiction. seeking a preliminary injunction A temporary order made by a court at the request of one party that prevents the other party from pursuing a particular course of conduct until the conclusion of a trial on the merits. A preliminary injunction is regarded as extraordinary relief. to halt the merger. On March 17, 1998, the companies announced that they would contest the FTC's attempt to block the transaction, citing the significant efficiencies and improved services to customers that would be created by the combination. The court hearing on the FTC's complaint was concluded on Friday, July 24, and the judge's ruling is currently anticipated by the end of the week. Mr. Roden concluded, "I am proud of the progress we have made in the past year, which is extraordinary considering the uncertainty that has surrounded our associates regarding the merger with Cardinal Health.usiness aggressively in order to maximize the oion, is one of the nation's leading supply chanpplies to all healthcare venues. These programs are designed to help customers grow efficiently, improve cost effectiveness, and further support their focus on patient/cffer materially from those projected or implied filed with the Securities and Exchange Commisspt instructions. You may also view the Company Third Quarter Ended Nine Months En,927,874 $10,057,196 $8,640,453 Costs and expenses: Cost of sales 3,325,594 2,768,893 9,506,742 8,157,832 Distribution, selling, general and administrative expenses 133,264 113,726 389,394 350,284 Merger expenses(a) -- -- 9,800 5,800 Total costs and expenses 3,458,858 2,882,619 9,905,936 8,513,916 Operating earnings 55,719 45,255 151,260 126,537 Net interest expense 9,650 8,148 30,339 23,305 Earnings before taxes on income 46,069 37,107 120,921 103,232 Taxes on income 18,889 14,883 53,596 42,325 Net earnings $ 27,180 $ 22,224 $ 67,325 $ 60,907 Earnings per share(aa): Basic $ .54 $ .44 $ 1.33 $ 1.21 Diluted $ .53 $ .44 $ 1.31 $ 1.20 Average number of shares(aa): Basic 50,519,009 50,291,574 50,459,399 50,139,982 Diluted 51,273,620 50,801,680 51,211,611 50,601,136 Proforma results excluding non-recurring charge: Operating earnings $ 161,060 $132,337 Earnings before taxes on income $ 130,721 $109,032 Net earnings $ 77,125 $ 64,329 Earnings per share(aa): Basic $ 1.53 $ 1.28 Diluted $ 1.51 $ 1.27 (a) Expenses for 1998 relate to the pending merger with Cardinal Health, Inc. Expenses for 1997 relate to the proposed merger with IVAX Corporation, which was terminated on March 20, 1997. (aa) Reflects adoption of Statement of Financial Accounting Standards No. 128, "Earnings per Share". Basic earnings per share are based on the weighted average number of shares of Class A Common Stock outstanding during each period. Diluted earnings per share assume exercise of employees' stock options. Bergen Brunswig Corporation Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. June 30, September 30, (In thousands) 1998 1997 Assets Cash and cash equivalents $ 50,654 $ 54,494 Accounts and notes receivable 884,724 772,342 Inventories 1,578,429 1,309,359 Other current assets Other Current Assets A balance sheet item that includes the value of non-cash assets due within one year. Notes: Examples are things like prepaid expenses and accounts receivable. 11,225 19,280 Total current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. 2,525,032 2,155,475 Net property and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. 569,996 551,648 Total assets $3,095,028 $2,707,123 Liabilities and Shareowners' Equity Accounts payable $1,604,827 $1,336,070 Other current liabilities Other Current Liabilities A balance sheet entry used by companies to group together current liabilities that are not assigned to common liabilities such as debt obligations or accounts payable. 275,273 288,236 Total current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. 1,880,100 1,624,306 Long-term obligations 519,245 437,956 Shareowners' equity 695,683 644,861 Total liabilities and shareowners' equity $3,095,028 $2,707,123
CONTACT: Bergen Brunswig Corporation, Orange
Lisa Riordan, Director, Investor Relations & Public
Relations, 800/840-5131 or 714/385-4079
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