EXHIBIT 99.1
News Release
[LOGO]
AmerisourceBergen
Contact: Michael N. Kilpatric
610-727-7118
mkilpatric@amerisourcebergen.com
AMERISOURCEBERGEN REPORTS RECORD OPERATING REVENUE AND
DILUTED EARNINGS PER SHARE FOR THE MARCH QUARTER
Operating Revenue Up 13 percent, and
Diluted EPS Up 23 percent
VALLEY FORGE, PA, April 24, 2003 -- AmerisourceBergen Corporation (NYSE:ABC)
today reported record results for its fiscal second quarter ended March 31,
2003. The following results are presented in accordance with generally accepted
accounting principles (GAAP).
Fiscal Second Quarter Highlights
. Record diluted earnings per share of $1.03, including special charges
of $0.02, up 23 percent.
. Record net income of $116.4 million, up 27 percent.
. Record operating revenue of $11.2 billion, up 13 percent.
. Return On Committed Capital (ROCC) of 26.2 percent.
Fiscal First Six Months Highlights
. Record diluted earnings per share of $1.87, including special charges
of $0.01, up 26 percent.
. Record net income of $209.2 million, up 31 percent.
. Record operating revenue of $22.3 billion, up 14 percent.
"AmerisourceBergen again delivered outstanding performance," said R. David
Yost, AmerisourceBergen's Chief Executive Officer. "We had excellent results
across all of our businesses. Strong operating revenues in combination with
operating expense efficiency drove significant operating margin expansion. This
performance combined with solid working capital management resulted in improved
return on committed capital and excellent earnings per share."
Discussion of Results
Diluted earnings per share for the second quarter of fiscal 2003 were
$1.03, a 23 percent increase over the $0.84 in the prior year's second quarter.
Included in these results were special charges of $2.4 million, net of tax, in
the second quarter of fiscal 2003 for facility consolidations and employee
severance and a $2.9 million 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 $0.02 in the second quarter of
fiscal 2003 and a decrease of $0.03 in the second quarter of fiscal 2002.
Also in the second quarter of fiscal 2003, the Company wrote down $5.5
million of its equity investment in a technology company, which is included in
the "equity in losses of affiliates and other" line in the income statement.
AmerisourceBergen's operating revenue, which excludes bulk deliveries to
customer warehouses, rose 13 percent to $11.2 billion in the second quarter of
fiscal 2003 compared to $9.9 billion for the same period last year.
For the first six months of fiscal 2003, diluted earnings per share were
$1.87, a 26 percent increase over the $1.48 in the same six-month period last
year. Special items related to facility consolidation and employee severance in
the first half of fiscal 2003 and merger costs in the first six months of fiscal
2002 resulted in a net decrease in earnings per share of $0.01 and $0.06,
respectively.
Operating revenue in the first six months of fiscal 2003 increased 14
percent to $22.3 billion from $19.6 billion in the same period of the previous
fiscal year.
"Our excellent operating performance in the quarter was driven primarily by
continued strong merger integration cost savings, excellent growth in our
specialty pharmaceuticals business, and contributions from recent acquisitions,"
said Kurt J. Hilzinger, AmerisourceBergen's President and Chief Operating
Officer.
"Throughout the period, the building of our new pharmaceutical distribution
network continued on time and on budget," he continued. "We consolidated two
distribution centers, one in Lynchburg, Virginia, and one in Joplin, Missouri,
into other facilities and remain on track to consolidate three more facilities
before the end of this fiscal year. We have now consolidated ten distribution
centers."
"In our PharMerica segment, strong, disciplined operating revenue growth of
10 percent reflects improved growth in both our long term care pharmacy and
workers' compensation fulfillment
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businesses," said Hilzinger. "Continued focus on improved operating practices
and customer mix drove operating expenses down and expanded operating margins in
the quarter to record levels."
Segment Review
AmerisourceBergen operates in two segments: Pharmaceutical Distribution
(which includes the AmerisourceBergen Drug Company and AmerisourceBergen
Specialty Group operations) and PharMerica (which includes the long term care
pharmacy and workers' compensation fulfillment businesses). Intersegment sales
of $192.8 million in the second quarter of fiscal 2003 from AmerisourceBergen
Drug Company 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 second quarter of fiscal 2003 increased to $11.0
billion compared with $9.8 billion in the second quarter of fiscal year 2002, a
13 percent increase.
Pharmaceutical Distribution customer mix in the second quarter of fiscal
2003 was 55 percent institutional and 45 percent retail. Institutional
customers, which include mail order facilities, hospitals and specialty
pharmaceutical customers, continued to grow faster than retail customers.
Gross profit as a percentage of operating revenue was 4.11 percent in the
second quarter of fiscal 2003, a 7 basis point improvement over the same period
in the prior fiscal year. Higher gross margins were positively impacted by
recent acquisitions, which offset the impacts of customer mix and the
competitive environment.
Total operating expenses as a percentage of operating revenue in the second
quarter of fiscal 2003 were 2.15 percent, an 8 basis point improvement over the
same quarter last year, driven by merger integration cost savings, customer mix,
and operating efficiencies, offset in part by higher expense ratios within
recent acquisitions.
Operating income as a percentage of operating revenue in the second quarter
of fiscal 2003 expanded 17 basis points to 1.97 percent compared to the second
quarter of fiscal 2002.
AmerisourceBergen Specialty Group, with annualized revenue of more than $3
billion, continued its strong quarterly performance, building significant
positions in oncology, blood plasma, and injectables distribution primarily to
physicians, as well as growing its manufacturing services businesses.
PharMerica
PharMerica's operating revenue for the second quarter of fiscal 2003
increased 10 percent to $397.1 million from $359.8 million in the previous
year's second quarter.
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Gross profit as a percentage of operating revenue was 32.35 percent in the
second quarter of fiscal 2003, a 117 basis point decline over the same period in
the prior fiscal year due primarily to the more rapid growth of the lower gross
margin workers' compensation business. The decline in gross margin was more than
offset by a 181 basis point improvement in total operating expenses as a
percentage of operating revenue due primarily to improved operating practices
and the change in customer mix. Operating income as a percentage of operating
revenue expanded 64 basis points in the quarter ended March 31, 2003 to 6.07
percent from 5.43 percent in the same period of the prior year.
Looking Ahead
"For the fiscal year ending September 30, 2003, we continue to expect to
grow operating revenue approximately 13 percent, with the second half of the
fiscal year growing between 11 percent and 12 percent. We continue to expect
earnings per share growth of 20 percent for the remainder of fiscal year 2003,
excluding the impact of special items and the cost of exercising the call option
on the PharMerica bonds in April 2003," said Yost. "ROCC is expected to remain
well above our 20 percent long-term target, and we continue to be confident in
our ability to achieve annual merger integration cost savings of approximately
$150 million by the end of fiscal year 2004, followed by additional cost savings
as we complete the build out of our distribution network."
Conference Call
The Company will host a conference call to discuss the results at 11:00
a.m. Eastern Daylight Time on April 24, 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: (866) 269-9612 from inside the U.S., no access code required
or (612) 332-0802 from outside the U.S., 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 4:15 p.m.
April 24, 2003 until 11:59 p.m. May 1, 2003.
To access the replay via telephone:
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Dial in: (800) 475-6701 from within the U.S., access code: 673719
(320) 365-3844 from outside the U.S., access code: 673719
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
systems/acute care market, physician's offices, alternate care and mail order
facilities, independent community pharmacies, and regional chain pharmacies. The
Company is also a leader in the long term care pharmacy and workers'
compensation fulfillment marketplaces. With more than $40 billion in annualized
operating revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and
employs more than 13,000 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.
###
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AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(unaudited)
Three Three
Months Ended % of Months Ended % of
March 31, Operating March 31, Operating %
2003 Revenue 2002 Revenue Change
---------------- ------------ ------------- ----------- ---------
Revenue:
Operating revenue $11,213,959 100.00% $9,918,609 100.00% 13%
Bulk deliveries to customer warehouses 948,582 1,025,658 -8%
---------------- -------------
Total revenue 12,162,541 10,944,267
Cost of goods sold 11,581,352 10,429,774 11%
---------------- -------------
Gross profit 581,189 5.18% 514,493 5.19% 13%
Operating expenses:
Distribution, selling and administrative 323,563 2.89% 304,576 3.07% 6%
Depreciation and amortization 17,069 0.15% 14,402 0.15% 19%
Facility consolidations and employee severance 4,005 0.04% - 0.00% N/A
Merger costs - 0.00% 4,741 0.05% N/A
---------------- -------------
Operating income 236,552 2.11% 190,774 1.92% 24%
Equity in losses (income) of affiliates and other 5,733 0.05% (354 0.00% N/A
Interest expense 38,399 0.34% 38,752 0.39% -1%
---------------- -------------
Income before taxes 192,420 1.72% 152,376 1.54% 26%
Income taxes 76,006 0.68% 60,502 0.61% 26%
---------------- -------------
Net income $ 116,414 1.04% $ 91,874 0.93% 27%
---------------- -------------
Earnings per share:
Basic $ 1.06 $ 0.88
Diluted $ 1.03 $ 0.84
Weighted average common shares outstanding:
Basic 109,438 104,404
Diluted 115,756 111,704
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(unaudited)
Six Six
Months Ended % of Months Ended % of
March 31, Operating March 31, Operating %
2003 Revenue 2002 Revenue Change
---------------- ----------- -------------- ---------- --------
Revenue:
Operating revenue $22,320,864 100.00% $19,604,885 100.00% 14%
Bulk deliveries to customer warehouses 2,276,210 2,408,162 -5%
---------------- --------------
Total revenue 24,597,074 22,013,047
Cost of goods sold 23,494,460 21,027,121 12%
---------------- --------------
Gross profit 1,102,614 4.94% 985,926 5.03% 12%
Operating expenses:
Distribution, selling and administrative 641,245 2.87% 602,168 3.07% 6%
Depreciation and amortization 34,338 0.15% 29,449 0.15% 17%
Facility consolidations and employee severance 2,624 0.01% - 0.00% N/A
Merger costs - 0.00% 12,238 0.06% N/A
---------------- --------------
Operating income 424,407 1.90% 342,071 1.74% 24%
Equity in losses of affiliates and other 5,916 0.03% 1,377 0.01% 330%
Interest expense 72,784 0.33% 75,745 0.39% -4%
---------------- --------------
Income before taxes 345,707 1.55% 264,949 1.35% 30%
Income taxes 136,554 0.61% 105,192 0.54% 30%
---------------- --------------
Net income $ 209,153 0.94% $ 159,757 0.81% 31%
---------------- --------------
Earnings per share:
Basic $ 1.93 $ 1.54
Diluted $ 1.87 $ 1.48
Weighted average common shares outstanding:
Basic 108,101 104,070
Diluted 114,566 111,443
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
ASSETS
March 31, September 30, $
2003 2002 Change
------------------ ------------------- ---------------
Current assets:
Cash and cash equivalents $ 225,956 $ 663,340 ($437,384)
Accounts receivable, net 2,163,665 2,222,156 (58,491)
Merchandise inventories 6,898,825 5,437,878 1,460,947
Prepaid expenses and other 16,211 26,263 (10,052)
------------------ ------------------ ---------------
Total current assets 9,304,657 8,349,637 955,020
Long-term assets 3,018,982 2,863,375 155,607
------------------ ------------------ ---------------
Total assets $12,323,639 $11,213,012 $1,110,627
================== ================== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,782,858 $ 5,367,837 $ 415,021
Current portion of long-term debt 60,948 60,819 129
Other current liabilities 744,518 670,861 73,657
------------------ ------------------ ---------------
Total current liabilities 6,588,324 6,099,517 488,807
Long-term debt, less current portion 2,000,790 1,756,494 244,296
Other liabilities 42,571 40,663 1,908
Stockholders' equity 3,691,954 3,316,338 375,616
------------------ ------------------ ---------------
Total liabilities and stockholders' equity $12,323,639 $11,213,012 $1,110,627
================== ================== ===============
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended March 31,
----------------------------------------------------------------
Operating Revenue 2003 2002 Change
- ------------------------------------------------- ----------------------------------------------------------------
Pharmaceutical Distribution $11,009,646 $9,750,903 13%
PharMerica 397,095 359,761 10%
Intersegment Eliminations (192,782) (192,055) 0%
------------------ ------------------
Operating revenue $11,213,959 $9,918,609 13%
================== ==================
Three Months Ended March 31,
----------------------------------------------------------------
Operating Income 2003 2002 Change
- ------------------------------------------------- ----------------------------------------------------------------
Pharmaceutical Distribution $216,456 $175,968 23%
PharMerica 24,101 19,547 23%
Merger costs, facility consolidations and
employee severance (4,005) (4,741) 16%
------------------ ------------------
Operating income $236,552 $190,774 24%
================== ==================
Percentages of operating revenue:
Pharmaceutical Distribution
Gross profit 4.11% 4.04%
Operating expenses 2.15% 2.23%
Operating income 1.97% 1.80%
PharMerica
Gross profit 32.35% 33.52%
Operating expenses 26.28% 28.09%
Operating income 6.07% 5.43%
AmerisourceBergen Corporation
Gross profit 5.18% 5.19%
Operating expenses 3.07% 3.26%
Operating income 2.11% 1.92%
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Six Months Ended March 31,
------------------------------------------------------------------
Operating Revenue 2003 2002 % Change
- ------------------------------------------------- ------------------------------------------------------------------
Pharmaceutical Distribution $21,909,216 $19,272,979 14%
PharMerica 799,937 715,176 12%
Intersegment Eliminations (388,289) (383,270) -1%
------------------ ------------------
Operating revenue $22,320,864 $19,604,885 14%
================== ==================
Six Months Ended March 31,
------------------------------------------------------------------
Operating Income 2003 2002 % Change
- ------------------------------------------------- ------------------------------------------------------------------
Pharmaceutical Distribution $379,391 $315,452 20%
PharMerica 47,640 38,857 23%
Merger costs, facility consolidations and
employee severance (2,624) (12,238) 79%
------------------ ------------------
Operating income $424,407 $342,071 24%
================== ==================
Percentages of operating revenue:
Pharmaceutical Distribution
Gross profit 3.85% 3.87%
Operating expenses 2.12% 2.23%
Operating income 1.73% 1.64%
PharMerica
Gross profit 32.26% 33.57%
Operating expenses 26.31% 28.14%
Operating income 5.96% 5.43%
AmerisourceBergen Corporation
Gross profit 4.94% 5.03%
Operating expenses 3.04% 3.28%
Operating income 1.90% 1.74%
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 Six months ended
March 31, March 31,
2003 2002 2003 2002
------------ ----------- ------------- -----------
Net income $116,414 $ 91,874 $209,153 $159,757
Interest expense - convertible subordinated notes, net of income taxes 2,489 2,481 4,978 4,961
Income available to common stockholders ------------ ----------- ------------- -----------
$118,903 $ 94,355 $214,131 $164,718
============ =========== ============= ===========
Weighted average common shares outstanding - basic 109,438 104,404 108,101 104,070
Effect of dilutive securities:
Options to purchase common stock 654 1,636 801 1,709
Convertible subordinated notes 5,664 5,664 5,664 5,664
------------ ----------- ------------- -----------
Weighted average common shares outstanding - diluted 115,756 111,704 114,566 111,443
============ =========== ============= ===========
Earnings per share:
Basic $ 1.06 $ 0.88 $ 1.93 $ 1.54
Diluted $ 1.03 $ 0.84 $ 1.87 $ 1.48