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8-K - 8-K - AMERISOURCEBERGEN CORPa14-10959_38k.htm

Exhibit 99.1

 

GRAPHIC

 

GRAPHIC

AmerisourceBergen Corporation

P.O. Box 959

Valley Forge, PA 19482

 

Contact:                                                Barbara Brungess

Vice President, Corporate & Investor Relations

610-727-7199

bbrungess@amerisourcebergen.com

 

AMERISOURCEBERGEN REPORTS

SECOND QUARTER FISCAL YEAR 2014 RESULTS

Now Expects Fiscal 2014 Adjusted Diluted EPS from Continuing Operations

 to be in the range of $3.64 to $3.74

 

VALLEY FORGE, PA, April 24, 2014 ¾ AmerisourceBergen Corporation (NYSE:ABC) today reported that in its fiscal year 2014 second quarter ended March 31, 2014, adjusted diluted earnings per share from continuing operations increased 19.1 percent to $1.06.  Revenue increased 38.6 percent to $28.5 billion in the quarter.  On the basis of U.S. generally accepted accounting principles (GAAP), diluted earnings per share from continuing operations were $0.76 for the March quarter of fiscal 2014.  In the tables that follow, we present our GAAP results as well as a reconciliation of GAAP income from continuing operations to adjusted non-GAAP income from continuing operations.

 

“We delivered strong performance in our March quarter, as we continued to onboard substantial new business, and made significant progress against our strategic objectives,” said Steven H. Collis, AmerisourceBergen President and Chief Executive Officer.  “With excellent operational performance and improving working capital trends that helped generate tremendous free cash flow in the quarter, we have good momentum heading into the second half of our fiscal year.  In addition, we continued to make important investments in our business for the long-term, including signing a definitive agreement to acquire a minority stake in Profarma Distribuidora de Produtos Farmacêuticos S.A. of Brazil, and returned funds to shareholders through repurchasing over $250 million of our common stock.”

 

The comments below compare adjusted results from continuing operations, which exclude:

 

·                  Gains on antitrust litigation settlements;

 

·                  LIFO expense;

 

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·                  Acquisition related intangibles amortization;

 

·                  Warrant expense; and

 

·                  Employee severance, litigation, and other expenses.

 

In addition, we calculate our adjusted earnings per share for each period using a diluted weighted average share count, which excludes the accounting dilution resulting from the impact of the unexercised equity warrants.

 

Summary of Adjusted Quarterly Results

 

·                  Revenue:  In the second quarter of fiscal 2014, revenue was $28.5 billion, up 38.6 percent compared to the same quarter in the previous fiscal year, reflecting a 46 percent increase in AmerisourceBergen Drug Corporation (ABDC) revenue, and a 10 percent increase in AmerisourceBergen Specialty Group (ABSG) revenue.

 

·                  Gross Profit:  Gross profit in the fiscal 2014 second quarter was $831.6 million, a 16.6 percent increase over the same period in the previous year, driven by strong overall revenue growth and generic sales in ABDC.  Gross profit as a percentage of revenue decreased 56 basis points to 2.92 percent, primarily due to a substantial increase in lower margin brand business.

 

·                  Operating Expenses:  In the second quarter of fiscal 2014, operating expenses were $415.0 million, up 16.1 percent over the same period in the last fiscal year.  The increase in operating expenses in the quarter was due primarily to costs associated with onboarding the new Walgreen Co. business.  Operating expenses as a percentage of revenue in the fiscal 2014 second quarter were 1.46 percent compared with 1.74 percent for the same period in the previous fiscal year.

 

·                  Operating Income:  In the fiscal 2014 second quarter, operating income of $416.6 million was up 17.0 percent versus the prior year, as the percentage increase in gross profit was slightly higher than the percentage increase in operating expenses. Operating income as a percentage of revenue decreased 27 basis points to 1.46 percent in the fiscal 2014 second quarter compared to the previous year’s second quarter.

 

·                  Tax Rate:  The effective tax rate for the second quarter of fiscal 2014 was 38.2 percent, in line with the previous fiscal year’s second quarter.  Going forward, we expect our annualized effective tax rate to be in the low 38 percent range.

 

·                  Earnings Per Share:  Diluted earnings per share from continuing operations were up 19.1 percent to $1.06 in the second quarter of fiscal year 2014 compared to $0.89 in the previous fiscal year’s second quarter, driven primarily by the increase in operating income.

 

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·                  Shares Outstanding:  Diluted weighted average shares outstanding for the second quarter of fiscal year 2014 were 234.3 million, a slight decrease versus the prior year as share repurchases offset option exercises.

 

Segment Discussion

 

The Pharmaceutical Distribution segment includes both AmerisourceBergen Drug Corporation and AmerisourceBergen Specialty Group.  Other includes AmerisourceBergen Consulting Services (ABCS) and World Courier.

 

Pharmaceutical Distribution Segment

 

In the second fiscal quarter of 2014, Pharmaceutical Distribution revenues were $27.9 billion, an increase of 39 percent compared to the same quarter in the prior year.  ABDC revenues increased 46 percent, due primarily to the onboarding of all of the new Walgreens branded pharmaceuticals business and a portion of their generic pharmaceuticals business, and increased branded pharmaceutical sales to our other large customers.  ABSG revenues increased 10 percent, which was driven by strong performance in our blood products, vaccine and physician office distribution businesses.  Intrasegment revenues between ABDC and ABSG have been eliminated in the presentation of total Pharmaceutical Distribution revenue.  Total intrasegment revenues were $976.3 million and $760.9 million in the quarters ended March 31, 2014 and 2013, respectively.

 

Operating income of $372.9 million in the March quarter of fiscal 2014 increased 16 percent compared to the same period in the previous year due to the new Walgreens branded and generic pharmaceuticals business in ABDC, strong contributions from generics overall, and solid performance in ABSG, as a flat performance in our community oncology business was offset by strong performance in our blood products and vaccine distribution businesses.

 

Other

 

Revenues in Other were $572.5 million in the second quarter of fiscal 2014, an increase of 11 percent over the same period in the prior year.  Operating income increased 25 percent to $43.6 million in the second quarter of fiscal 2014, driven by strong performance in World Courier.

 

3



 

Fiscal Year 2014 Expectations

 

AmerisourceBergen now expects adjusted diluted earnings per share from continuing operations in fiscal year 2014 to be in the range of $3.64 to $3.74, a 13 percent to 17 percent increase over fiscal 2013.  We continue to expect revenue growth in the range of 30 percent to 34 percent, and operating income growth in the 12 percent to 16 percent range.  We continue to expect adjusted operating margin to decline in the 20 to 23 basis points range due to the onboarding of significant new lower margin business and growth in brand pharmaceutical business with our large customers.  We continue to expect to generate free cash flow in the range of $500 to $700 million, with capital expenditures in the $300 million range, and to spend approximately $500 million in share repurchases, subject to market conditions.

 

Conference Call

 

The Company will host a conference call to discuss the results at 11:00 a.m. Eastern Time on April 24, 2014.

 

Participating in the conference call will be:

 

Steven H. Collis, President & Chief Executive Officer

 

Tim G. Guttman, Senior Vice President & Chief Financial Officer

 

The dial-in number for the live call will be (651) 291-0618.  No access code is required.

 

The live call will also be webcast via the Company’s website at www.amerisourcebergen.com.  Users are encouraged to log on to the webcast approximately 10 minutes in advance of the scheduled start time of the call.

 

Replays of the call will be made available via telephone and webcast.  A replay of the webcast will be posted on www.amerisourcebergen.com approximately two hours after the completion of the call and will remain available for thirty days.  The telephone replay will also be available approximately two hours after the completion of the call and will remain available for seven days.  To access the telephone replay from within the US, dial (800) 475-6701.  From outside the US, dial (320) 365-3844.  The access code for the replay is 323936.

 

About AmerisourceBergen

 

AmerisourceBergen is one of the largest global pharmaceutical sourcing and distribution services companies, helping both healthcare providers and pharmaceutical and biotech manufacturers improve patient access to products and enhance patient care. With services ranging from drug distribution and

 

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niche premium logistics to reimbursement and pharmaceutical consulting services, AmerisourceBergen delivers innovative programs and solutions across the pharmaceutical supply channel. With over $100 billion in annualized revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and employs approximately 13,000 people. AmerisourceBergen is ranked #32 on the Fortune 500 list. For more information, go to www.amerisourcebergen.com.

 

AmerisourceBergen’s Cautionary Note Regarding Forward-Looking Statements

 

Certain of the statements contained in this news release are “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. Words such as “expect,” “likely,” “outlook,” “forecast,” “would,” “could,” “should,” “can,” “will,” “project,” “intend,” “plan,” “continue,” “sustain,” “synergy,” “on track,” “believe,” “seek,” “estimate,” “anticipate,” “may,” “possible,” “assume,” variations of such words, and similar expressions are intended to identify such forward-looking statements. These statements are based on management’s current expectations and are subject to uncertainty and change in circumstances. These statements are not guarantees of future performance and are based on assumptions that could prove incorrect or could cause actual results to vary materially from those indicated. Among the factors that could cause actual results to differ materially from those projected, anticipated, or implied are the following: changes in pharmaceutical market growth rates; the loss of one or more key customer or supplier relationships; the retention of key customer or supplier relationships under less favorable economics; changes in customer mix; customer delinquencies, defaults or insolvencies; supplier defaults or insolvencies; changes in branded and/or generic pharmaceutical manufacturers’ pricing and distribution policies or practices; adverse resolution of any contract or other dispute with customers or suppliers; federal and state government enforcement initiatives to detect and prevent suspicious orders of controlled substances and the diversion of controlled substances, federal and state prosecution of alleged violations of related laws and regulations, and any related litigation, including shareholder derivative lawsuits or other disputes relating to our distribution of controlled substances; qui tam litigation for alleged violations of fraud and abuse laws and regulations and/or any other laws and regulations governing the marketing, sale, purchase and/or dispensing of pharmaceutical products or services and any related litigation, including shareholder derivative lawsuits; changes in federal and state legislation or regulatory action affecting pharmaceutical product pricing or reimbursement policies, including under Medicaid and Medicare, and the effect of such changes on our customers; changes in regulatory or clinical medical guidelines and/or labeling for the pharmaceutical products we distribute; price inflation in branded and generic pharmaceuticals and price deflation in generics; greater or less than anticipated benefit from launches of the generic versions of previously patented pharmaceutical products; significant breakdown or interruption of our information technology systems; our inability to realize the anticipated benefits of the implementation of an enterprise resource planning (ERP) system; interest rate and foreign currency exchange rate fluctuations; risks associated with international business operations, including non-compliance with the U.S. Foreign Corrupt Practices Act, anti-bribery laws and economic sanctions and import laws and regulations; economic, business, competitive and/or regulatory developments in countries where we do business and/or operate outside of the United States; risks associated with the strategic, long-term relationship among Walgreen Co., Alliance Boots GmbH, and AmerisourceBergen, the occurrence of any event, change or other circumstance that could give rise to the termination, cross-termination or modification of any of the transaction documents among the parties (including, among others, the distribution agreement or the generics agreement), an impact on our earnings per share resulting from the issuance of the Warrants, an inability to realize anticipated benefits (including benefits resulting from participation in the Walgreens Boots Alliance Development GmbH joint venture), the disruption of AmerisourceBergen’s cash flow and ability to return value to its stockholders in accordance with its past practices, disruption of or changes in vendor, payer and customer relationships and terms, and the reduction of AmerisourceBergen’s operational, strategic or financial flexibility; the acquisition of businesses that do not perform as we expect or that are difficult for us to integrate or control; our inability to successfully complete any other transaction that we may wish to pursue from time to time; changes in tax laws or legislative initiatives that could adversely affect our tax positions and/or our tax liabilities or adverse resolution of challenges to our tax positions; increased costs of maintaining, or reductions in our ability to maintain, adequate liquidity and financing sources; volatility and deterioration of the capital and credit markets; natural disasters or other unexpected events that affect our operations; and other economic, business, competitive, legal, tax, regulatory and/or operational factors affecting our business 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) and Item 1 (Business) in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013 and elsewhere in that report and (ii) in other reports.

 

# # #

 

5



 

AMERISOURCEBERGEN CORPORATION

FINANCIAL SUMMARY

(In thousands, except per share data)

(unaudited)

 

 

 

Three

 

 

 

Three

 

 

 

 

 

 

 

Months Ended

 

 

 

Months Ended

 

 

 

 

 

 

 

March 31,

 

% of

 

March 31,

 

% of

 

%

 

 

 

2014

 

Revenue

 

2013

 

Revenue

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

28,455,903

 

100.00%

 

$

20,523,668

 

100.00%

 

38.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

27,726,310

 

 

 

19,806,679

 

 

 

40.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit 1

 

729,593

 

2.56%

 

716,989

 

3.49%

 

1.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Distribution, selling and administrative

 

376,341

 

1.32%

 

323,536

 

1.58%

 

16.3%

 

Depreciation and amortization

 

44,494

 

0.16%

 

39,868

 

0.19%

 

11.6%

 

Warrants

 

5,663

 

0.02%

 

3,761

 

0.02%

 

 

 

Employee severance, litigation and other

 

1,967

 

0.01%

 

(299

)

—%

 

 

 

Total operating expenses

 

428,465

 

1.51%

 

366,866

 

1.79%

 

16.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

301,128

 

1.06%

 

350,123

 

1.71%

 

-14.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) loss

 

(3,783

)

-0.01%

 

749

 

—%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

19,474

 

0.07%

 

18,510

 

0.09%

 

5.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

285,437

 

1.00%

 

330,864

 

1.61%

 

-13.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

105,360

 

0.37%

 

126,721

 

0.62%

 

-16.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

180,077

 

0.63%

 

204,143

 

0.99%

 

-11.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of income taxes

 

 

 

 

(158,509

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

180,077

 

0.63%

 

$

45,634

 

0.22%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.78

 

 

 

$

0.89

 

 

 

-12.4%

 

Discontinued operations

 

 

 

 

(0.69

)

 

 

 

 

Total

 

$

0.78

 

 

 

$

0.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.76

 

 

 

$

0.87

 

 

 

-12.6%

 

Discontinued operations

 

 

 

 

(0.68

)

 

 

 

 

Total

 

$

0.76

 

 

 

$

0.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

229,409

 

 

 

230,422

 

 

 

 

 

Diluted 2

 

236,268

 

 

 

234,587

 

 

 

0.7%

 

 


1  Includes a $0.8 million gain from antitrust litigation settlements and a $102.8 million LIFO expense in the threemonths ended March 31, 2014.  Includes a $3.5 million gain from antitrust litigation settlements and a $0.2 million LIFO credit in the three months ended March 31, 2013.

 

2  Includes the dilutive effect of stock options, restricted stock, restricted stock units and the Warrants issued to Walgreens and Alliance Boots.

 



 

AMERISOURCEBERGEN CORPORATION

FINANCIAL SUMMARY

(In thousands, except per share data)

(unaudited)

 

 

 

Six

 

 

 

Six

 

 

 

 

 

 

 

Months Ended

 

 

 

Months Ended

 

 

 

 

 

 

 

March 31,

 

% of

 

March 31,

 

% of

 

%

 

 

 

2014

 

Revenue

 

2013

 

Revenue

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

57,632,265

 

100.00%

 

$

41,583,479

 

100.00%

 

38.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

56,214,447

 

 

 

40,205,662

 

 

 

39.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit 1

 

1,417,818

 

2.46%

 

1,377,817

 

3.31%

 

2.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Distribution, selling and administrative

 

740,401

 

1.28%

 

644,236

 

1.55%

 

14.9%

 

Depreciation and amortization

 

88,444

 

0.15%

 

78,552

 

0.19%

 

12.6%

 

Warrants

 

121,960

 

0.21%

 

3,761

 

0.01%

 

 

 

Employee severance, litigation and other

 

6,269

 

0.01%

 

1,705

 

—%

 

 

 

Total operating expenses

 

957,074

 

1.66%

 

728,254

 

1.75%

 

31.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

460,744

 

0.80%

 

649,563

 

1.56%

 

-29.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) loss

 

(4,380

)

-0.01%

 

726

 

—%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

38,306

 

0.07%

 

37,035

 

0.09%

 

3.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

426,818

 

0.74%

 

611,802

 

1.47%

 

-30.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

197,810

 

0.34%

 

233,038

 

0.56%

 

-15.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

229,008

 

0.40%

 

378,764

 

0.91%

 

-39.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of income taxes

 

(7,546

)

 

 

(164,519

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

221,462

 

0.38%

 

$

214,245

 

0.52%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

1.00

 

 

 

$

1.64

 

 

 

-39.0%

 

Discontinued operations

 

(0.03

)

 

 

(0.71

)

 

 

 

 

Rounding

 

(0.01

)

 

 

 

 

 

 

 

Total

 

$

0.96

 

 

 

$

0.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.97

 

 

 

$

1.61

 

 

 

-39.8%

 

Discontinued operations

 

(0.03

)

 

 

(0.70

)

 

 

 

 

Total

 

$

0.94

 

 

 

$

0.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

229,852

 

 

 

231,409

 

 

 

 

 

Diluted 2

 

236,650

 

 

 

235,307

 

 

 

0.6%

 

 


1  Includes a $21.9 million gain from antitrust litigation settlements and a $160.4 million LIFO expense in the six months ended March 31, 2014.  Includes a $15.8 million gain from antitrust litigation settlements and a $1.0 million LIFO expense in the six months ended March 31, 2013.

 

2  Includes the dilutive effect of stock options, restricted stock, restricted stock units and the Warrants issued to Walgreens and Alliance Boots.

 



 

AMERISOURCEBERGEN CORPORATION

RECONCILIATION OF CONTINUING OPERATIONS (GAAP) TO ADJUSTED CONTINUING OPERATIONS (NON-GAAP)

(dollars in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended March 31, 2014

 

 

 

GAAP

 

Dilution of
Unexercised
Warrants

 

Gain on
Antitrust
Litigation
Settlements

 

LIFO Expense

 

Acquisition
Related
Intangibles
Amortization

 

Warrant
Expense

 

Employee
Severance,
Litigation and
Other

 

Adjusted
Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

28,455,903

 

 

 

$

 

$

 

$

 

$

 

$

 

$

28,455,903

 

Cost of goods sold

 

27,726,310

 

 

 

849

 

(102,828

)

 

 

 

27,624,331

 

Gross profit

 

729,593

 

 

 

(849

)

102,828

 

 

 

 

831,572

 

Operating expenses

 

428,465

 

 

 

 

 

(5,825

)

(5,663

)

(1,967

)

415,010

 

Operating income

 

301,128

 

 

 

(849

)

102,828

 

5,825

 

5,663

 

1,967

 

416,562

 

Other income

 

(3,783

)

 

 

 

 

 

 

 

(3,783

)

Interest expense, net

 

19,474

 

 

 

 

 

 

 

 

19,474

 

Income before income taxes

 

285,437

 

 

 

(849

)

102,828

 

5,825

 

5,663

 

1,967

 

400,871

 

Income taxes 1

 

105,360

 

 

 

(361

)

38,862

 

2,207

 

6,315

 

750

 

153,133

 

Income from continuing operations

 

$

180,077

 

 

 

$

(488

)

$

63,966

 

$

3,618

 

$

(652

)

$

1,217

 

$

247,738

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations 2

 

$

0.76

 

$

0.01

 

$

 

$

0.27

 

$

0.02

 

$

 

$

0.01

 

$

1.06

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding 2

 

236,268

 

234,272

 

234,272

 

234,272

 

234,272

 

234,272

 

234,272

 

234,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentages of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

2.56%

 

 

 

 

 

 

 

 

 

 

 

 

 

2.92%

 

Operating expenses

 

1.51%

 

 

 

 

 

 

 

 

 

 

 

 

 

1.46%

 

Operating income

 

1.06%

 

 

 

 

 

 

 

 

 

 

 

 

 

1.46%

 

 


The amount of Warrant expense deductible for tax purposes is based on the initial valuation of the Warrants.  Therefore, the income tax rate on Warrant expense will vary by quarter depending upon the quarterly changes in the fair value of the Warrants.

 

For the reconciling items and for the non-GAAP presentation, diluted earnings per share and diluted weighted average common shares outstanding have been adjusted to exclude the impact of the accounting dilution from the unexercised Warrants.

 

The sum of the components may not equal the total due to rounding.

 

Note: Management considers GAAP financial measures as well as the presented non-GAAP financial measures in evaluating the company’s operating performance.  Therefore, we believe that our presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors.

 



 

AMERISOURCEBERGEN CORPORATION

RECONCILIATION OF CONTINUING OPERATIONS (GAAP) TO ADJUSTED CONTINUING OPERATIONS (NON-GAAP)

(dollars in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended March 31, 2013

 

 

 

GAAP

 

Gain on
Antitrust
Litigation
Settlements

 

LIFO Credit

 

Acquisition
Related
Intangibles
Amortization

 

Warrant
Expense

 

Employee
Severance,
Litigation and
Other

 

Adjusted
Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

20,523,668

 

$

 

$

 

$

 

$

 

$

 

$

20,523,668

 

Cost of goods sold

 

19,806,679

 

3,456

 

215

 

 

 

 

19,810,350

 

Gross profit

 

716,989

 

(3,456

)

(215

)

 

 

 

713,318

 

Operating expenses

 

366,866

 

 

 

(6,098

)

(3,761

)

299

 

357,306

 

Operating income

 

350,123

 

(3,456

)

(215

)

6,098

 

3,761

 

(299

)

356,012

 

Other loss

 

749

 

 

 

 

 

 

749

 

Interest expense, net

 

18,510

 

 

 

 

 

 

18,510

 

Income before income taxes

 

330,864

 

(3,456

)

(215

)

6,098

 

3,761

 

(299

)

336,753

 

Income taxes

 

126,721

 

(1,320

)

(82

)

2,330

 

1,130

 

(114

)

128,665

 

Income from continuing operations

 

$

204,143

 

$

(2,136

)

$

(133

)

$

3,768

 

$

2,631

 

$

(185

)

$

208,088

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations

 

$

0.87

 

$

(0.01

)

$

 

$

0.02

 

$

0.01

 

$

 

$

0.89

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

234,587

 

234,587

 

234,587

 

234,587

 

234,587

 

234,587

 

234,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentages of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

3.49%

 

 

 

 

 

 

 

 

 

 

 

3.48%

 

Operating expenses

 

1.79%

 

 

 

 

 

 

 

 

 

 

 

1.74%

 

Operating income

 

1.71%

 

 

 

 

 

 

 

 

 

 

 

1.73%

 

 


The sum of the components may not equal the total due to rounding.

 

Note: Management considers GAAP financial measures as well as the presented non-GAAP financial measures in evaluating the company’s operating performance.  Therefore, we believe that our presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors.

 



 

AMERISOURCEBERGEN CORPORATION

RECONCILIATION OF CONTINUING OPERATIONS (GAAP) TO ADJUSTED CONTINUING OPERATIONS (NON-GAAP)

(dollars in thousands, except per share data)

(unaudited)

 

 

 

Six Months Ended March 31, 2014

 

 

 

GAAP

 

Dilution of
Unexercised
Warrants

 

Gain on
Antitrust
Litigation
Settlements

 

LIFO Expense

 

Acquisition
Related
Intangibles
Amortization

 

Warrant
Expense

 

Employee
Severance,
Litigation and
Other

 

Adjusted
Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

57,632,265

 

 

 

$

 

$

 

$

 

$

 

$

 

$

57,632,265

 

Cost of goods sold

 

56,214,447

 

 

 

21,872

 

(160,410

)

 

 

 

56,075,909

 

Gross profit

 

1,417,818

 

 

 

(21,872

)

160,410

 

 

 

 

1,556,356

 

Operating expenses

 

957,074

 

 

 

 

 

(11,783

)

(121,960

)

(6,269

)

817,062

 

Operating income

 

460,744

 

 

 

(21,872

)

160,410

 

11,783

 

121,960

 

6,269

 

739,294

 

Other income

 

(4,380

)

 

 

 

 

 

 

 

(4,380

)

Interest expense, net

 

38,306

 

 

 

 

 

 

 

 

38,306

 

Income before income taxes

 

426,818

 

 

 

(21,872

)

160,410

 

11,783

 

121,960

 

6,269

 

705,368

 

Income taxes 1

 

197,810

 

 

 

(8,243

)

60,450

 

4,441

 

12,630

 

2,363

 

269,451

 

Income from continuing operations

 

$

229,008

 

 

 

$

(13,629

)

$

99,960

 

$

7,342

 

$

109,330

 

$

3,906

 

$

435,917

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations 2

 

$

0.97

 

$

0.01

 

$

(0.06

)

$

0.43

 

$

0.03

 

$

0.47

 

$

0.02

 

$

1.86

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding 2

 

236,650

 

234,838

 

234,838

 

234,838

 

234,838

 

234,838

 

234,838

 

234,838

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentages of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

2.46%

 

 

 

 

 

 

 

 

 

 

 

 

 

2.70%

 

Operating expenses

 

1.66%

 

 

 

 

 

 

 

 

 

 

 

 

 

1.42%

 

Operating income

 

0.80%

 

 

 

 

 

 

 

 

 

 

 

 

 

1.28%

 

 


The amount of Warrant expense deductible for tax purposes is based on the initial valuation of the Warrants.  Therefore, the income tax rate on Warrant expense will vary by quarter depending upon the quarterly changes in the fair value of the Warrants.

 

For the reconciling items and for the non-GAAP presentation, diluted earnings per share and diluted weighted average common shares outstanding have been adjusted to exclude the impact of the accounting dilution from the unexercised Warrants.

 

The sum of the components may not equal the total due to rounding.

 

Note: Management considers GAAP financial measures as well as the presented non-GAAP financial measures in evaluating the company’s operating performance.  Therefore, we believe that our presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors.

 



 

AMERISOURCEBERGEN CORPORATION

RECONCILIATION OF CONTINUING OPERATIONS (GAAP) TO ADJUSTED CONTINUING OPERATIONS (NON-GAAP)

(dollars in thousands, except per share data)

(unaudited)

 

 

 

Six Months Ended March 31, 2013

 

 

 

GAAP

 

Gain on
Antitrust
Litigation

Settlements

 

LIFO Expense

 

Acquisition
Related
Intangibles
Amortization

 

Warrant
Expense

 

Employee
Severance,
Litigation and
Other

 

Adjusted
Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

41,583,479

 

$

 

$

 

$

 

$

 

$

 

$

41,583,479

 

Cost of goods sold

 

40,205,662

 

15,764

 

(952

)

 

 

 

40,220,474

 

Gross profit

 

1,377,817

 

(15,764

)

952

 

 

 

 

1,363,005

 

Operating expenses

 

728,254

 

 

 

(12,197

)

(3,761

)

(1,705

)

710,591

 

Operating income

 

649,563

 

(15,764

)

952

 

12,197

 

3,761

 

1,705

 

652,414

 

Other loss

 

726

 

 

 

 

 

 

726

 

Interest expense, net

 

37,035

 

 

 

 

 

 

37,035

 

Income before income taxes

 

611,802

 

(15,764

)

952

 

12,197

 

3,761

 

1,705

 

614,653

 

Income taxes

 

233,038

 

(5,978

)

362

 

4,638

 

1,130

 

644

 

233,834

 

Income from continuing operations

 

$

378,764

 

$

(9,786

)

$

590

 

$

7,559

 

$

2,631

 

$

1,061

 

$

380,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations

 

$

1.61

 

$

(0.04

)

$

 

$

0.03

 

$

0.01

 

$

 

$

1.62

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

235,307

 

235,307

 

235,307

 

235,307

 

235,307

 

235,307

 

235,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentages of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

3.31%

 

 

 

 

 

 

 

 

 

 

 

3.28%

 

Operating expenses

 

1.75%

 

 

 

 

 

 

 

 

 

 

 

1.71%

 

Operating income

 

1.56%

 

 

 

 

 

 

 

 

 

 

 

1.57%

 

 


The sum of the components may not equal the total due to rounding.

 

Note: Management considers GAAP financial measures as well as the presented non-GAAP financial measures in evaluating the company’s operating performance.  Therefore, we believe that our presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors.

 



 

 AMERISOURCEBERGEN CORPORATION

 CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

 

 

March 31,

 

September 30,

 

 

 

2014

 

2013

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

696,730

 

$

1,231,006

 

Accounts receivable, net

 

6,506,412

 

6,051,920

 

Merchandise inventories

 

8,493,269

 

6,981,494

 

Prepaid expenses and other

 

63,616

 

129,231

 

Total current assets

 

15,760,027

 

14,393,651

 

 

 

 

 

 

 

Property and equipment, net

 

850,847

 

803,561

 

Other long-term assets

 

3,750,373

 

3,721,426

 

 

 

 

 

 

 

Total assets

 

$

20,361,247

 

$

18,918,638

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

14,909,626

 

$

13,335,792

 

Other current liabilities

 

1,590,305

 

1,534,843

 

Total current liabilities

 

16,499,931

 

14,870,635

 

 

 

 

 

 

 

Long-term debt

 

1,396,948

 

1,396,606

 

 

 

 

 

 

 

Other long-term liabilities

 

318,853

 

331,652

 

 

 

 

 

 

 

Stockholders’ equity

 

2,145,515

 

2,319,745

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

20,361,247

 

$

18,918,638

 

 



 

AMERISOURCEBERGEN CORPORATION

SUMMARY SEGMENT INFORMATION

(dollars in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

Revenue

 

2014

 

2013

 

% Change

 

 

 

 

 

 

 

 

 

Pharmaceutical Distribution

 

$

27,932,495

 

$

20,054,159

 

39%

 

Other

 

572,503

 

514,942

 

11%

 

Intersegment eliminations

 

(49,095

)

(45,433

)

8%

 

 

 

 

 

 

 

 

 

Revenue

 

$

28,455,903

 

$

20,523,668

 

39%

 

 

 

 

Three Months Ended March 31,

 

Operating Income

 

2014

 

2013

 

% Change

 

 

 

 

 

 

 

 

 

Pharmaceutical Distribution

 

$

372,929

 

$

321,077

 

16%

 

Other

 

43,633

 

34,935

 

25%

 

Gain on antitrust litigation settlements

 

849

 

3,456

 

 

 

LIFO (expense) credit

 

(102,828

)

215

 

 

 

Acquisition related intangibles amortization

 

(5,825

)

(6,098

)

 

 

Warrant expense

 

(5,663

)

(3,761

)

 

 

Employee severance, litigation and other

 

(1,967

)

299

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

301,128

 

$

350,123

 

-14%

 

 

 

 

 

 

 

 

 

Percentages of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pharmaceutical Distribution

 

 

 

 

 

 

 

Gross profit

 

2.49%

 

2.93%

 

 

 

Operating expenses

 

1.15%

 

1.33%

 

 

 

Operating income

 

1.34%

 

1.60%

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Gross profit

 

23.82%

 

24.40%

 

 

 

Operating expenses

 

16.20%

 

17.61%

 

 

 

Operating income

 

7.62%

 

6.78%

 

 

 

 

 

 

 

 

 

 

 

AmerisourceBergen Corporation (GAAP)

 

 

 

 

 

 

 

Gross profit

 

2.56%

 

3.49%

 

 

 

Operating expenses

 

1.51%

 

1.79%

 

 

 

Operating income

 

1.06%

 

1.71%

 

 

 

 

 

 

 

 

 

 

 

AmerisourceBergen Corporation (Non-GAAP)

 

 

 

 

 

 

 

Gross profit

 

2.92%

 

3.48%

 

 

 

Operating expenses

 

1.46%

 

1.74%

 

 

 

Operating income

 

1.46%

 

1.73%

 

 

 

 



 

AMERISOURCEBERGEN CORPORATION

SUMMARY SEGMENT INFORMATION

(dollars in thousands)

(unaudited)

 

 

 

Six Months Ended March 31,

 

Revenue

 

2014

 

2013

 

% Change

 

 

 

 

 

 

 

 

 

Pharmaceutical Distribution

 

$

56,555,086

 

$

40,653,207

 

39%

 

Other

 

1,176,635

 

1,019,992

 

15%

 

Intersegment eliminations

 

(99,456

)

(89,720

)

11%

 

 

 

 

 

 

 

 

 

Revenue

 

$

57,632,265

 

$

41,583,479

 

39%

 

 

 

 

Six Months Ended March 31,

 

Operating Income

 

2014

 

2013

 

% Change

 

 

 

 

 

 

 

 

 

Pharmaceutical Distribution

 

$

659,711

 

$

587,754

 

12%

 

Other

 

79,583

 

64,660

 

23%

 

Gain on antitrust litigation settlements

 

21,872

 

15,764

 

 

 

LIFO expense

 

(160,410

)

(952

)

 

 

Acquisition related intangibles amortization

 

(11,783

)

(12,197

)

 

 

Warrant expense

 

(121,960

)

(3,761

)

 

 

Employee severance, litigation and other

 

(6,269

)

(1,705

)

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

460,744

 

$

649,563

 

-29%

 

 

 

 

 

 

 

 

 

Percentages of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pharmaceutical Distribution

 

 

 

 

 

 

 

Gross profit

 

2.28%

 

2.74%

 

 

 

Operating expenses

 

1.11%

 

1.30%

 

 

 

Operating income

 

1.17%

 

1.45%

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Gross profit

 

22.69%

 

24.23%

 

 

 

Operating expenses

 

15.92%

 

17.89%

 

 

 

Operating income

 

6.76%

 

6.34%

 

 

 

 

 

 

 

 

 

 

 

AmerisourceBergen Corporation (GAAP)

 

 

 

 

 

 

 

Gross profit

 

2.46%

 

3.31%

 

 

 

Operating expenses

 

1.66%

 

1.75%

 

 

 

Operating income

 

0.80%

 

1.56%

 

 

 

 

 

 

 

 

 

 

 

AmerisourceBergen Corporation (Non-GAAP)

 

 

 

 

 

 

 

Gross profit

 

2.70%

 

3.28%

 

 

 

Operating expenses

 

1.42%

 

1.71%

 

 

 

Operating income

 

1.28%

 

1.57%

 

 

 

 



 

AMERISOURCEBERGEN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Six

 

Six

 

 

 

Months Ended

 

Months Ended

 

 

 

March 31,

 

March 31,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

Net income

 

$

221,462

 

$

214,245

 

Loss from discontinued operations

 

7,546

 

164,519

 

Income from continuing operations

 

229,008

 

378,764

 

Adjustments to reconcile income from continuing operations to net cash provided by operating activities

 

231,572

 

141,401

 

Changes in operating assets and liabilities

 

(340,381

)

178,059

 

Net cash provided by operating activities - continuing operations

 

120,199

 

698,224

 

Net cash (used in) provided by operating activities - discontinued operations

 

(7,546

)

45,431

 

Net cash provided by operating activities

 

112,653

 

743,655

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

Capital expenditures

 

(125,392

)

(88,377

)

Other

 

(2,743

)

81

 

Net cash used in investing activities - continuing operations

 

(128,135

)

(88,296

)

Net cash used in investing activities - discontinued operations

 

 

(9,643

)

Net cash used in investing activities

 

(128,135

)

(97,939

)

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

Purchases of common stock

 

(251,961

)

(284,691

)

Exercises of stock options

 

59,675

 

65,850

 

Cash dividends on common stock

 

(108,397

)

(98,203

)

Purchases of capped call options

 

(211,397

)

 

Other

 

(6,714

)

(6,086

)

Net cash used in financing activities - continuing operations

 

(518,794

)

(323,130

)

Net cash used in financing activities - discontinued operations

 

 

(41,897

)

Net cash used in financing activities

 

(518,794

)

(365,027

)

 

 

 

 

 

 

(Decrease) increase in cash and cash equivalents

 

(534,276

)

280,689

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

1,231,006

 

1,066,608

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

696,730

 

$

1,347,297