VALLEY FORGE, Pa.--(BUSINESS WIRE)--Nov. 5, 2003--
Operating Revenue Grew 13 Percent in September Quarter and Fiscal
Year 2003
AmerisourceBergen Corporation (NYSE:ABC) today reported record
results for its fiscal fourth quarter and year ended September 30,
2003. The following results are presented in accordance with generally
accepted accounting principles (GAAP).
Fiscal Fourth Quarter Highlights
-- Record diluted earnings per share of $1.04, including special
charges of $0.01, up 21 percent.
-- Record net income of $119.5 million, up 26 percent.
-- Operating margin expansion of 9 basis points.
-- Record operating revenue of $11.7 billion, up 13 percent.
Fiscal Year 2003 Highlights
-- Record diluted earnings per share of $3.89, including special
charges of $0.07, up 23 percent.
-- Record net income of $441.2 million, up 28 percent.
-- Record operating revenue of $45.5 billion, up 13 percent.
-- Operating margin expansion of 15 basis points.
"In our second full fiscal year as AmerisourceBergen, we built on
last year's momentum to deliver exceptional performance," said R.
David Yost, AmerisourceBergen's Chief Executive Officer. "We achieved
solid results across all of our businesses as we continued to enhance
our role in the pharmaceutical supply channel. Double-digit operating
margin expansion for the fiscal year was driven by strong, disciplined
growth in operating revenue combined with record operating expense
efficiency and a solid contribution from our recent acquisitions. This
performance resulted in record operating income and excellent earnings
per share growth."
Discussion of Results
Diluted earnings per share for the fourth quarter of fiscal 2003
were $1.04, a 21 percent increase over the $0.86 in the prior year's
fourth quarter. Included in these results were special charges, net of
tax, in the fourth quarter of fiscal 2003 of $1.5 million for facility
consolidations and employee severance and a $2.3 million special
charge, net of tax, in the same period of the previous fiscal year for
merger integration activities. The earnings per share impact of the
special charges was a decrease of $0.01 in the fourth quarter of
fiscal 2003 and a decrease of $0.02 in the fourth quarter of fiscal
2002.
AmerisourceBergen's operating revenue in the fourth quarter was
$11.7 billion, a 13 percent increase over the $10.4 billion in the
previous year's fourth quarter. Bulk deliveries in the quarter
decreased to $0.9 billion from $1.2 billion in the prior fiscal year's
fourth quarter, reflecting the conversion of bulk business into
operating revenue earlier in fiscal 2003.
For fiscal year 2003, diluted earnings per share were $3.89, a 23
percent increase over the $3.16 reported last fiscal year. Special
charges, net of tax, related to facility consolidations and employee
severance and the retirement of debt in fiscal 2003 and merger costs
in fiscal 2002 resulted in a net decrease in earnings per share of
$0.07 and $0.13, respectively.
Operating revenue in fiscal 2003 increased 13 percent to $45.5
billion from $40.2 billion in the prior fiscal year. Bulk deliveries
to customer warehouses decreased to $4.1 billion from $5.0 billion in
the prior fiscal year, reflecting the impact of the conversion of bulk
business to operating revenue in fiscal 2003.
"Our superior operating performance in fiscal 2003 resulted
primarily from continued strong merger integration cost savings,
excellent growth in our specialty pharmaceuticals business,
contributions from recent acquisitions, and record operating
performance in PharMerica," said Kurt J. Hilzinger,
AmerisourceBergen's President and Chief Operating Officer.
"In pharmaceutical distribution, we continue to capture
integration cost savings significantly ahead of schedule," he
continued. "During fiscal 2003, we consolidated six distribution
centers, including one that had more than $1 billion in revenue, for a
total of 13 consolidations since the merger. We also began
construction of three new distribution centers during the year, with
the first one scheduled to open in the summer of 2004. In fiscal 2004,
we expect to consolidate three more of the existing distribution
centers and break ground on an additional three new distribution
centers. We continue to be on plan and on budget for completing the
new distribution system within the next four years."
"In our PharMerica segment, continued focus on cost controls and
operating practices drove operating margins in the September quarter
to over 7 percent for the first time," said Hilzinger. "Operating
revenue in the fiscal fourth quarter of 2003 grew 6 percent over the
same quarter in the prior fiscal year, as operating earnings growth
continues to outpace revenue gains."
Segment Review
AmerisourceBergen operates in two segments: Pharmaceutical
Distribution (which includes AmerisourceBergen Drug Corporation and
AmerisourceBergen Specialty Group) and PharMerica (which includes the
long term care pharmacy and workers' compensation businesses).
Intersegment operating revenue of $211.2 million in the fourth quarter
of fiscal 2003 from AmerisourceBergen Drug Corporation to PharMerica,
which is included in the Pharmaceutical Distribution segment operating
revenue, is eliminated for consolidated reporting purposes.
Pharmaceutical Distribution Segment
Operating revenue in the fourth quarter of fiscal 2003 increased
to $11.5 billion compared with $10.2 billion in the fourth quarter of
fiscal year 2002, a 13 percent increase.
Pharmaceutical Distribution customer mix in the fourth quarter of
fiscal 2003 was 58 percent institutional and 42 percent retail.
Operating revenue from institutional customers, which include mail
order and alternate site facilities, hospitals and specialty
pharmaceutical customers, continued to grow significantly faster than
operating revenue from retail customers.
AmerisourceBergen Specialty Group, with annualized revenue of
nearly $4 billion, continued its strong performance, building
leadership positions in the distribution of products and services to
physicians in numerous disease states, including oncology, as well as
growing its manufacturer services businesses such as reimbursement
consulting.
Gross profit as a percentage of operating revenue in the fourth
quarter of fiscal 2003 was 3.86 percent, compared to 3.92 percent in
the same period in the prior fiscal year. Gross margins were
positively impacted by recent acquisitions, which offset in part the
negative impacts of customer mix and the competitive environment.
Total operating expenses as a percentage of operating revenue in
the fourth quarter of fiscal 2003 were 2.09 percent, an 11 basis point
improvement over the same quarter last year, driven by customer mix,
merger integration cost savings and operating efficiencies, offset in
part by higher expense ratios within recent acquisitions.
Operating margins (operating income as a percentage of operating
revenue) expanded 5 basis points in the fourth quarter of fiscal 2003
to 1.77 percent compared to 1.72 percent in the fourth quarter of in
the previous fiscal year.
PharMerica
PharMerica's operating revenue for the fourth quarter of fiscal
2003 increased 6 percent to $408.4 million from $386.1 million in the
previous year's fourth quarter.
Operating margin expanded to a record 7.08 percent in the
September quarter due primarily to cost control and improved operating
practices.
Looking Ahead
"AmerisourceBergen's long-term guidance is to grow operating
revenue with the U.S. pharmaceutical market, which is currently
expected to grow 10 percent to 13 percent through 2007, and grow
annual earnings per share excluding special items at 15 percent or
greater," said Yost. "For the fiscal year ending September 30, 2004,
we expect to grow operating revenue in line with the U.S.
pharmaceutical market, which is expected to be at the lower end of the
four-year range. With our disciplined approach to revenue growth, we
expect to grow diluted earnings per share, excluding special items,
for fiscal year 2004 at approximately 15 percent, within a range of
$4.50 per share to $4.60 per share."
Conference Call
The Company will host a conference call to discuss the results at
11:00 a.m. Eastern Standard Time on November 5, 2003. 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, Senior Vice President and Chief Financial Officer.
To access the live conference call via telephone:
Dial in: (888) 428-4478 from within the United States.
No access code required or
(651) 291-0344 from outside the United States.
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. EST on November 5, 2003 to 11:59 p.m. EST on November 12,
2003.
To access the replay via telephone:
Dial in: (800) 475-6701 from within the U.S., access code: 701428
(320) 365-3844 from outside the U.S., access code: 701428
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 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. 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
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. 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 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 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 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 for fiscal 2002.
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
Sept. 30, Operating Sept. 30, Operating %
2003 Revenue 2002 Revenue Change
------------ --------- ------------ --------- ------
Revenue:
Operating
revenue $11,733,254 100.00% $10,357,502 100.00% 13%
Bulk deliveries
to customer
warehouses 906,329 1,243,418 -27%
------------ ------------
Total revenue 12,639,583 11,600,920
Cost of goods
sold 12,055,417 11,072,301 9%
------------ ------------
Gross profit 584,166 4.98% 528,619 5.10% 11%
Operating
expenses:
Distribution,
selling and
administrative 330,934 2.82% 314,184 3.03% 5%
Depreciation
and
amortization 20,313 0.17% 16,962 0.16% 20%
Facility
consolidations
and employee
severance 2,426 0.02% - 0.00% N/A
Merger costs - 0.00% 3,859 0.04% N/A
------------ ------------
Operating income 230,493 1.96% 193,614 1.87% 19%
Equity in losses
of affiliates and
other 457 0.00% 4,460 0.04% N/A
Interest expense 34,726 0.30% 31,663 0.31% 10%
------------ ------------
Income before
taxes 195,310 1.66% 157,491 1.52% 24%
Income taxes 75,780 0.65% 62,531 0.60% 21%
------------ ------------
Net income $119,530 1.02% $94,960 0.92% 26%
============ ============
Earnings per
share:
Basic $1.07 $0.89
Diluted $1.04 $0.86
Weighted average
common shares
outstanding:
Basic 111,503 106,225
Diluted 117,896 113,134
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(unaudited)
Fiscal Fiscal
Year Ended % of Year Ended % of
Sept. 30, Operating Sept. 30, Operating %
2003 Revenue 2002 Revenue Change
------------ --------- ------------ --------- ------
Revenue:
Operating
revenue $45,536,689 100.00% $40,240,714 100.00% 13%
Bulk deliveries
to customer
warehouses 4,120,639 4,994,080 -17%
------------ ------------
Total revenue 49,657,328 45,234,794
Cost of goods
sold 47,410,169 43,210,320 10%
------------ ------------
Gross profit 2,247,159 4.93% 2,024,474 5.03% 11%
Operating
expenses:
Distribution,
selling and
administrative 1,284,132 2.82% 1,220,651 3.03% 5%
Depreciation
and
amortization 70,991 0.16% 61,151 0.15% 16%
Facility
consolidations
and employee
severance 8,930 0.02% - 0.00% N/A
Merger costs - 0.00% 24,244 0.06% N/A
------------ ------------
Operating income 883,106 1.94% 718,428 1.79% 23%
Equity in losses
of affiliates and
other 8,015 0.02% 5,647 0.01% 42%
Interest expense 144,744 0.32% 140,734 0.35% 3%
Loss on early
retirement of
debt 4,220 0.01% - 0.00% N/A
------------ ------------
Income before
taxes 726,127 1.59% 572,047 1.42% 27%
Income taxes 284,898 0.63% 227,106 0.56% 25%
------------ ------------
Net income $441,229 0.97% $344,941 0.86% 28%
============ ============
Earnings per
share:
Basic $4.03 $3.29
Diluted $3.89 $3.16
Weighted average
common shares
outstanding:
Basic 109,513 104,935
Diluted 115,954 112,228
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
ASSETS
Sept. 30, Sept. 30, $
2003 2002 Change
------------ ------------ ---------
Current assets:
Cash and cash equivalents $800,036 $663,340 $136,696
Accounts receivable, net 2,295,437 2,222,156 73,281
Merchandise inventories 5,733,837 5,437,878 295,959
Prepaid expenses and other 29,208 26,263 2,945
------------ ------------ ---------
Total current assets 8,858,518 8,349,637 508,881
Long-term assets 3,181,607 2,863,375 318,232
------------ ------------ ---------
Total assets $12,040,125 $11,213,012 $827,113
============ ============ =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,393,769 $5,367,837 $25,932
Current portion of long-term
debt 61,430 60,819 611
Other current liabilities 800,903 670,861 130,042
------------ ------------ ---------
Total current
liabilities 6,256,102 6,099,517 156,585
Long-term debt, less current
portion 1,722,724 1,756,494 (33,770)
Other liabilities 55,982 40,663 15,319
Stockholders' equity 4,005,317 3,316,338 688,979
------------ ------------ ---------
Total liabilities and
stockholders' equity $12,040,125 $11,213,012 $827,113
============ ============ =========
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Fiscal Fiscal
Year Year
Ended Ended
Sept. 30, Sept. 30,
2003 2002
--------- ---------
Operating Activities:
Net income $441,229 $344,941
Non-cash items 271,192 190,033
Changes in operating assets and liabilities (357,606) 952
--------- ---------
Net cash provided by operating activities 354,815 535,926
--------- ---------
Investing Activities:
Capital expenditures (90,554) (64,159)
Cost of acquired companies, net of cash
acquired (111,981) (136,223)
Other 726 (2,432)
--------- ---------
Net cash used in investing activities (201,809) (202,814)
--------- ---------
Financing Activities:
Net repayments under revolving credit and
receivables securitization facilities - (37,000)
Net repayments of long-term debt (38,989) (23,119)
Exercise of stock options 42,564 101,509
Cash dividends on common stock (10,995) (10,500)
Other (8,890) 1,712
--------- ---------
Net cash (used in) provided by financing
activities (16,310) 32,602
--------- ---------
Increase in cash and cash equivalents 136,696 365,714
Cash and cash equivalents at beginning of year 663,340 297,626
--------- ---------
Cash and cash equivalents at end of year $800,036 $663,340
========= =========
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended Sept. 30,
-----------------------------------
Operating Revenue 2003 2002 % Change
---------------------------------- -----------------------------------
Pharmaceutical Distribution $11,536,052 $10,172,674 13%
PharMerica 408,380 386,061 6%
Intersegment Eliminations (211,178) (201,233) -5%
------------ ------------
Operating revenue $11,733,254 $10,357,502 13%
============ ============
Three Months Ended Sept. 30,
-----------------------------------
Operating Income 2003 2002 % Change
---------------------------------- -----------------------------------
Pharmaceutical Distribution $204,025 $174,622 17%
PharMerica 28,894 22,851 26%
Merger costs, facility
consolidations and employee
severance (2,426) (3,859) 37%
------------ ------------
Operating income $230,493 $193,614 19%
============ ============
Percentages of operating revenue:
Pharmaceutical Distribution
Gross profit 3.86% 3.92%
Operating expenses 2.09% 2.20%
Operating income 1.77% 1.72%
PharMerica
Gross profit 33.92% 33.71%
Operating expenses 26.84% 27.79%
Operating income 7.08% 5.92%
AmerisourceBergen Corporation
Gross profit 4.98% 5.10%
Operating expenses 3.01% 3.23%
Operating income 1.96% 1.87%
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Fiscal Year Ended Sept. 30,
-----------------------------------
Operating Revenue 2003 2002 % Change
--------------------------------- -----------------------------------
Pharmaceutical Distribution $44,731,200 $39,539,858 13%
PharMerica 1,608,203 1,475,028 9%
Intersegment Eliminations (802,714) (774,172) -4%
------------ ------------
Operating revenue $45,536,689 $40,240,714 13%
============ ============
Fiscal Year Ended Sept. 30,
-----------------------------------
Operating Income 2003 2002 % Change
--------------------------------- -----------------------------------
Pharmaceutical Distribution $788,193 $659,208 20%
PharMerica 103,843 83,464 24%
Merger costs, facility
consolidations and employee
severance (8,930) (24,244) 63%
------------ ------------
Operating income $883,106 $718,428 23%
============ ============
Percentages of operating revenue:
Pharmaceutical Distribution
Gross profit 3.85% 3.87%
Operating expenses 2.09% 2.20%
Operating income 1.76% 1.67%
PharMerica
Gross profit 32.69% 33.49%
Operating expenses 26.23% 27.83%
Operating income 6.46% 5.66%
AmerisourceBergen Corporation
Gross profit 4.93% 5.03%
Operating expenses 3.00% 3.25%
Operating income 1.94% 1.79%
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 Fiscal year ended
Sept. 30, Sept. 30,
2003 2002 2003 2002
--------- -------- --------- ---------
Net income $119,530 $94,960 $441,229 $344,941
Interest expense - convertible
subordinated notes, net of
income taxes 2,518 2,481 9,997 9,922
--------- -------- --------- ---------
Income available to common
stockholders $122,048 $97,441 $451,226 $354,863
========= ======== ========= =========
Weighted average common shares
outstanding - basic 111,503 106,225 109,513 104,935
Effect of dilutive securities:
Options to purchase common
stock 729 1,245 777 1,629
Convertible subordinated
notes 5,664 5,664 5,664 5,664
--------- -------- --------- ---------
Weighted average common shares
outstanding - diluted 117,896 113,134 115,954 112,228
========= ======== ========= =========
Earnings per share:
Basic $1.07 $0.89 $4.03 $3.29
Diluted $1.04 $0.86 $3.89 $3.16
CONTACT: AmerisourceBergen Corporation, Valley Forge
Michael N. Kilpatric, 610-727-7118
mkilpatric@amerisourcebergen.com
SOURCE: AmerisourceBergen Corporation